If the Correlation of Returns Between Foreign Projects and Domestic

question 18

Multiple Choice

If the correlation of returns between foreign projects and domestic projects is less than 1.0, then:

• A)Foreign projects should be discounted with a higher rate
• B)The domestic firm would be better off without the foreign projects
• C)The foreign project may not add much risk to the existing domestic operation
• D)The foreign projects will experience a higher degree of inflation

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Definitions:

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